Documents show Holden wanted to build mid-sized front-drive car alongside Cruze
16 April 2014
By BARRY PARK
HOLDEN had asked the government for more taxpayer money to build fewer cars using a shrinking number of Australian parts, documents released under freedom of information legislation show.
The documents, released to Federal Member for Wakefield Nick Champion and relating to federal Industry Minister Ian Macfarlane’s October 2 meeting with Holden managing director Mike Devereux, paint a grim picture for Holden’s future in Australia.
The revelation was made in a briefing document prepared for Mr Macfarlane ahead of the meeting – the minister’s first with the car-maker since the Abbott Government’s election, and months before Holden was forced into announcing it would shutter its Australian car-making operations.
“You would be aware that I am currently considering automotive policy options,” the briefing, titled Talking points – Holden/SA government says.
“I understand Holden’s need for policy certainty in order for long-term investments to be made.
“However, Holden is seeking additional assistance for smaller production volumes, a smaller spend on locally produced components, and to support fewer supply chain companies,” it says.
Hoden declined to comment on the contents of the document.
“We’re not going to engage in hypothetical speculation,” Holden manager of corporate communications Sean Poppitt said.
“Holden looked at every possible option to build our next-gen vehicles in Australia but the perfect storm of negative influences the industry faced – including the sustained strength of the dollar and high production costs – meant the long-term business case was simply not viable. “We also don’t publicly discuss any details of talks with government,” he said.
“Those discussions were, and remain, commercially confidential information to our business.”
An Industry Department spokesperson told GoAuto the numbers that contributed to Mr Macfarlane’s briefing documents also would not be released despite the announcement that Holden would quit car-making in Australia from late in 2017.
“The information you requested is commercial-in-confidence and has been redacted from the documents released under FOI accordingly,” the spokesperson said.
The documents released under FOI also reveal that, along with the next-generation Cruze small car, Holden planned to build a vehicle based on GM’ s global Epsilon platform.
That platform underpins one car that, despite being imported from Korea, has very specifically been tuned to Australian tastes – the mid-size Holden Malibu.
However, the $28,490 Malibu has struggled to win buyers against more established rivals including the locally made fleet car specialist the $30,490 Toyota Camry, a more fuel-efficient and technology-laden $33,460 Mazda6 and even Ford’s ageing $31,490 Mondeo.
In the first three months of this year, Holden’s petrol and diesel-only Malibu has pegged 368 sales compared with petrol and hybrid-engined market leader Camry’s 4983, and has undersold rivals including the petrol-only Honda Accord and Volkswagen’s petrol and diesel Passat sedan and wagon range, as well as the Golf-with-a-boot Jetta sedan featuring a similar fuel mix.
Recently appointed Holden chairman and managing director Gerry Dorizas says the company is aiming to be the top selling brand in Australia by 2020.
Speaking to media for the first time since taking over the job months after Holden announced it would cease producing vehicles in Australia by the end of 2017, Dorizas ambitiously said Holden will claw back the market share it has lost to arch rival Toyota and eventually find itself as Australia's favourite car brand.
"The strategy or the point where we want to go is to go back to number one," Dorizas said.
"In a boxing match there's 12 rounds ... I think we've gone through the eighth round. There's still some rounds to go, but we’ll be back."
Dorizas nominated 2020 as the target year that Holden would retain the title it once looked like owning for good.
The unscripted prediction is a bold announcement for a brand that at the turn of the century was a dominant number one, talking of 25 per cent market share but struggling to achieve 10 per cent in the face of a dramatic shift in customer demand away from the large cars Holden has long specialised in towards smaller cars and SUVs.
But the 53-year-old Japanese-born Greek national says there is no reason the brand cannot return to the top of the sales charts.
However, he said the market share of the top-selling car maker - currently Toyota - will drop, making that target more achievable.
Toyota's market share once hovered around 22 per cent but has slid to 18.9 per cent last year.
While that's still clearly ahead of Holden in number two - at 9.9 per cent - it's indicative of the fragmentation of what's considered one of the world's most diverse and competitive markets.
"The market shares are going to start levelling out," Dorizas said. "I don't see that we're going to be 20 per cent [market share] ... I believe that it will be 15 per cent one brand, 14 per cent the other, so everything will come closer together."
Dorizas admitted there was work to be done if Holden were to achieve its ambitious goal.
He highlighted a better product line-up, more focused dealer network and boosting the brand’s share with the all-important younger generation as key to driving sales.
"Of course, we need the product strategy which is being deployed," he said.
"We need the focus, together with the network, we need our focus as well.
"We have to refocus, it's going to take time, it’s going to take a lot of work.
"I believe the notion of 'no worries mate' is not the identification of how we work. We will work hard, and we need to get the credibility back."
Dorizas also pointed to servicing as key to Holden's success, saying customer and dealer satisfaction was crucial.
He said of the carpark of 2.2 million Holdens in Australia only about one quarter were getting their cars serviced at a Holden dealership.
"We don't service the carpark that we have in Australia," said Dorizas. "We will innovate ... we will get our customers back."
He said the demise of local manufacturing and its importance in the success of Holden - locally produced models have been the backbone of the brand for more than half a century - would not hold back its transition to a full importer.
"We have always been an Australian brand, we will always be historically an Australian brand," said Dorizas.
"The experience of the customer makes a brand, the correct product within the segments make the brand and also the best partners [dealers] ... make the brand.
"In Australia Holden is Holden, so there is history behind it ... we will come back."
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New Holden boss Gerry Dorizas said brand 'here to stay'
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According to Autocar magazine, a plan is under serious consideration by GM for a rear-wheel-drive V8 sports saloon to be developed and built in North America to replace the Commodore, which is sold there as a Chevrolet SS.
If the business case stacks up, the new-generation SS would be exported to Australia, where it would be pressed into service by both Holden and Holden Special Vehicles, which creates the VXR8.
Senior GM engineer Dave Leone said affordable rear-drive performance cars would remain part of GM’s product portfolio beyond the Aussie Holden’s demise.
“If you are a performance enthusiast, then rear-wheel drive is the way to go and that’s the part of the rear-drive [GM] Alpha platform will play,” Leone said.
GM announced it would stop making vehicles in Australia and New Zealand by the end of 2017 late last year, citing high costs and a poor supply chain as the reasons behind its decision, which puts an end to 70 years of Holden vehicle manufacturing in the company.
Toyota has also announced it will be pulling out of Australia by the start of 2017, leaving the country with no local vehicle production. Like GM, Toyota will instead move to become a vehicle importer in the country.
If a green light is given, the new model will be developed and built in North America, with Holden Special Vehicles (HSV) possibly creating its own variant as it does now with the Australian-made Commodore.
Senior GM engineer Dave Leone confirmed that the Detroit carmaker is interested in continuing the series beyond Holden's manufacturing closure.